There is often a lot of confusion about the documents required for business loan. Most loan applicants dread the complex paperwork as it is the most tedious part of a business loan application.This guide will explain how to craft a successful loan application with the necessary documents. Most lenders clearly outline their business loan eligibility and business loan requirements.
KYC process: This is the process followed by a lender to gain a thorough understanding of a borrower before offering a loan. Most lenders follow this process to verify the credentials of their loan applicants. Due diligence mandates that financial institutions follow the proper KYC process while disbursing loans.
Brief List of Documents Required for business loan:
1. Pan Card: PAN card is mandatory for any financial transaction or service. It is issued to individuals by the Income Tax Department. It is one of the most crucial documents required for business loan.
2. Aadhaar Card: The Government has made it mandatory to link Aadhaar Card to a Bank Account. Aadhaar card can greatly reduce the need to produce extra documents while applying for a loan. It is accepted as a valid address proof while opening a bank account. New regulations have been passed that make it mandatory to link the Aadhaar Card to PAN card. Thus, along with PAN Card, Aadhar is one of the important documents required for business loan.
3. Income Tax Return: Most lending institutions typically require 2-3 years Income Tax Returns while applying for a loan. The reason Income Tax Return is one of the documents required for business loan is that it serves as an Income Proof. It also allows the lender to assess the stability and consistency of your income. Another important observation by lenders is whether you have filed your IT returns on time. A loan applicant who files his IT returns on time is more likely to pay his EMI on time.
4. Residence Proof: The residence proof is one of the necessary documents required for business loan as it allows a lender to ascertain whether the applicant lives in a location where they have operations. Most lending institutions decide their area of operations and lend exclusively in that area.
5. Business Address Proof: Lenders verify if the applicant is functioning within its area of operations. This is one of the documents required for business loan as the location is the first filter used by a business to determine if it will offer a loan.
6. Bank Statements: The Bank Statement is one of the documents required for business loan as it enables the lender to verify your spending and repayment behaviour. A good credit balance every month will convince the lender that you’re reliable enough to pay back a loan.
You must ensure you have all the documents required for a new business loan, prior to applying for one.
Click here to see documents required for business loan from ZipLoan.